The author is a Forbes contributor. The opinions expressed are those of the writer.

Loading ...

Loading ...

This story appears in the {{article.article.magazine.pretty_date}} issue of {{article.article.magazine.pubName}}. Subscribe

I think we are seeing the fatal flaw of the scale first, monetize later model of internet startups. Instagram has been embroiled this week in an uproar about its new, and very broad, terms of service. Kevin Systrom, Instagram's co-founder wrote a blog post yesterday trying to diffuse the outcry by saying that its intentions have been misunderstood and that, "Legal documents are easy to misinterpret."

But whether or not Instagram or Facebook intend to sell member's photos to advertisers or merely allow photos by members who like a given brand to be presented adjacent to images from that brand, the point is that in order to benefit from Facebook's scale for legitimately usefult things like spam filtering, Instagram needs to create data that is interoperable with Facebook's. And here lies the rub.

What does this have to do with SnapChat, the self-destructing photo (and now video) sharing app for iOS and Android that is growing on an Instagram-like trajectory—particularly among teens and young adults? To put it bluntly, a big reason why SnapChat is cool for kids is because it is not Facebook. It's not only that the idea of ephemeral images is relevant to young people's rate of change, which is even greater than adults' experience of our hyper-accelerated culture. It's that giving users control over the duration of their data is a new idea—and one that is completely at odds with Facebook's underlying design paradigm.

Briefly, SnapChat allows you to find or invite friends from your address book and then send one or more friends a picture (and now 10 second videos, as well) and set the duration (between one and ten seconds) that it will be visible on your friend's screen before it disappears, ostensibly forever. But what about screenshots? You can capture the images, if you are quick, but the sender is informed immediately if you do. Although widely considered a "sexting" app, most of the 50 million photos evaporating through SnapChats servers are likely #LOL funny faces, #AWW cuteness, #FAILs and other hashtag genres.

No doubt, some of what goes on with SnapChat may in hindsight be regrettable, but (other than the screenshot trail) these indiscretions have no digital afterlife. Instead of focusing on the unseemly part, what I think is more significant is the little bit of control (1-10 seconds and who to send to for each image) that the app gives its users over their data. It is a trend worth following because it runs counter to the ways most tech companies are trying to monetize social media.

Which brings us back to Facebook. When I read on Monday that the one billion strong social network was working on its own version of a SnapChat-like app, I had a moment of cognitive dissonance. Is Facebook really going to embrace user data volatility when it runs counter to its whole business model? Like Google with its Street View payload data debacle, Facebook seems to simply be incapable of resisting the siren song of warehousing more data. And I would contend that Instagram's current jam is the result of it trying to fit into Facebook's data paradigm—and it's a stretch.

When I got co-founder Mike Krieger to talk about how Instagram would handle monetization while maintaining the user-centric focus that fueled their growth, he said that it would approach revenue opportunities like any other feature to test and refine. Looking at it from this perspective, Instagram's new terms of service (TOS) were written to give the company the maximum flexibility to try out monetization schemes. But, of course, once you have 100 million users, you are subject to intense external scrutiny for everything you do. Even if, as Systrom writes, "it is not our intention to sell your photos," the TOS were easily interpreted to make that possible. And although in terms of Instagram photos being used in ads, Systrom clarified, "We do not have plans for anything like this," if the TOS do not specifically limit such usage we can assume that, at some point, it could happen.

And this is where we get back to SnapChat. The upstart app run by four 20-something Stanford grads operating out of founder Evan Spiegel's Dad's house in LA, clearly does not have the infrastructure to reuse of its users' data. Once they take that rumored $8 million from Benchmark Capital, that could all change, of course. The question for SnapChat, and this really is a big money question, is if they can find a means of monetization that preserves user control over rapid data decay as a core design principle of their product. That would open the way for thinking about user data differently than Facebook and the other large social networks have.

On the most obvious level, SnapChat could be monetized through cell phone carriers as a means of increasing data usage fees. The problem, of course, would be that then SnapChat would have an incentive counter to the interest of its users (i.e. users want faster and cheaper.) But at least that would be tied to the amount of the data, not the content of the data.

Mathew Ingram wrote in a very intelligent post on the Instagram flap this morning on GigaOm that, "In the vast majority of cases, if you are using a service provided for free on the internet, you are paying for that product or service with your attention, and that attention is going to be monetized in a variety of ways." He continues that he believes, "this is a fair trade—I get a free service that has a lot of value, and I pay for it by looking at (and possibly even participating in) some advertising. If you don’t like this bargain, then you have other choices." So we shouldn't expect something for nothing, but the corollary is that we should be active in deciding if we like the bargain.

Forbes' Parmy Olson writes in a recent post that, "Before it was assumed that anything we created should be stored and categorized for some future, as-yet-unknown circumstance. Now it’s becoming clear that most of us have simply too much content to adequately handle." What's missing in Olson's analysis is that it is social networks, preeminently Facebook, that have made those assumptions, not users. SnapChat has now raised the issue in a big way and users, it seems, have use for non-reusable data.

So Facebook can start its own standalone SnapChat clone tied into its massive infrastructure, and people will use it. But I would not expect it to be a runaway success like SnapChat—precisely because of that massive infrastructure. How can users trust Facebook with their volatile data? The entire grain of the Facebook service is designed to trigger sharing, to motivate storage and to increase the ability to generate social data. Unfortunately for Instagram, despite the best of intentions, it now finds itself in the same position.

The other, more disruptive way Facebook could respond to the fact of SnapChat (other than copying them or buying them) would be to learn from their example. Facebook could, through a wrenching realignment, become the fine grain means through which users could gain control over their data. It could provide easy-to-use tools that would encourage that control and sense of ownership. It could become a privacy platform instead of a privacy liability, and perhaps users would pay for that service. If not Facebook, then Google or someone. The next generation of users are voting with their Snaps—and they want more control.